The Empowered Trader by Mark Fechner

Learning to Respond to the Market, not just React

Archive for the ‘Decisions’ Category

Documentary FLOORED – So Now What?

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For those traders that can’t make the transition to computers, there are very few options open for this very specialized skill set.  In this final excerpt, we see what some of the interviewees are planning to do once they leave the floor, either by choice or attrition.

Written by etradingcoach

February 21, 2014 at 5:00 am

Posted in Decisions, Education

Six Sources of Trader Burnout (pt. 2)

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In my previous posting I had presented 6 potential sources of trader burnout.  Here are the final three sources.

  • Trading Overload – Part of the appeal of trading, especially in the Forex market, is the 24 hour access provided.  This is often a selling point for novice traders.  The reality, however, is very different and few people can sustain a trading schedule that covers more than a few hours at a time.  Fatigue, hunger, bathroom breaks and seclusion are just a few of the problems associated with 24 hour/6 day/week accessibility.  Availability does not mean profitability.  Place boundaries on your trading activity so as not to get overwhelmed by it
  • Perceived Unfairness – If you haven’t figured it out, I’m sorry to bust your bubble, but the market doesn’t care about your position in Google, the number of hours you’ve analyzed your charts or how much time and money you’ve spent learning how to trade.  The market is very narcissistic and will slap you upside the head in a moment’s notice.  This perceived “beat down” can have a toll on a person’s resolve and should be reevaluated if it affects other aspects of your life.
  • Lack of Community – As I mention in Trading Overload, trading can be a very solitary experience.  Most traders are alone with their computer making what can be life altering decisions about themselves and the ones closest to them.  The responsibility of these decisions can be overwhelming.  It’s important to be a part of a group or organization, like the Chicago Trading Group,  that allows you to talk about trading with others that understand what you’re experiencing.

Trading can be a fulfilling, long-term, rewarding activity.  It also has its own dangers that need to be heeded by anyone engaging in market. Awareness, acknowledgement and action on these 6 sources allow novice traders to transition to veteran traders relativity unscathed.

Written by etradingcoach

February 18, 2014 at 5:00 am

Posted in Decisions, Education

The Good Enough Trader Fired Up!*

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The Good Enough Trader explained what many traders experience, a sense of maintaining the status quo. Things are “good enough” when it comes to the trading results. Another way to look at it is a sense of breakeven, not too big either from a winner or loser point of view. This can result, for lack of a better description, in a malaise of mediocrity.

Please don’t mistake the description of “malaise of mediocrity” as a negative. It’s an imperfect way of describing what you might be feeling in your trading results. If you are generally happy with maintain status quo, then you don’t need to read any further. The malaise of mediocrity I’m speaking of is a sense discontentment regarding your trading results.

Generally, most traders that talk about a break-even result are not happy. They have envisioned some sort of result that will propel them into another type of reality, be that lifestyle, tax bracket or bank account. But somehow the dream of making a bunch of money hasn’t been realized. A way of remedying this situation is to create a passion about your trading.

Awareness & Acknowledgement

The awareness and acknowledgement are kind of in the same thought process. By acknowledging that you’re not happy with your results is also the awareness that your results are not what you expect them to be. So, unlike The Revenge Trade Calmed or The Defeated Trader Empowered, there isn’t the same need to step back and make the awareness that something is amiss that requires you to pause and acknowledge the feeling. The Good Enough Trader is more contemplative. Since this is a level that is very much “in your head”, it’s very easy to get stuck there and not able “think” your way out.

Action

So what is required is to utilize some of the Revenge Trader to spark a fire about your trading. The focus of that spark is directed toward the question, why are you trading? I addressed this in my posting The Difference Between the Will and the Way. Understanding what the purpose of your trading is will go a long way to inspiring you to make trades that feed a specific purpose. As an example, I trade not because of the money, but because what I’m able to do with my life. My priorities in my life are my family and my community. Trading has allowed me to pursue a type of lifestyle that allows me to work from home and be very present to my family. I use the Revenge Trader to fight for that lifestyle and create trades that support those goals. If the trading didn’t serve that purpose, I would most likely find something else that did. Another way of looking at this is that I’m trading for a living not living for trading. The strategies, my style of trading, all support the priorities in my life.

A suggestion would be to examine your reasons for trading. Create some clarity about your reasons for coming back to the market day after day. Making money can be achieved by many ventures. What is it about trading that is different from say opening up a coffee shop or starting a consulting business? How does trading support your lifestyle?

If you would like to have some assistance regarding your trading goals, sign up for a complementary exploratory coaching call. Click this link to find an available time to meet.

The next condition we’ll examine is The Altruistic Trader.

*The educational material contained is gratefully adapted from the training received at the Institute for Professional Excellence in Coaching (iPEC), its founder Bruce D Schneider, and his bestselling book Energy Leadership.

Written by etradingcoach

February 14, 2014 at 3:00 am

Documentary FLOORED – Is this suppose to be the greener side?

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In this excerpt of Floored, we look at the realm of high stress electronic trading.  The challenges don’t go away just because you now have a computer making the decisions for you.  The attractiveness of the computer screens is often overshadowed by what appears to be the lack of control.

Written by etradingcoach

February 12, 2014 at 10:30 am

Six Sources of Trader Burnout (pt. 1)

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To say that trading is hard is stating an obvious fact.  The apocryphal factoid that 95% of all traders fail is in the back of most traders’ minds as they experience the roller coaster that is the financial market.  Regardless of this fact’s accuracy, trading amongst professional and retail traders alike experience a higher then normal turnover rate compared to other activities.

So it’s important to occasionally assess your state of mind and see if you are experiencing signs of trader burnout.  Trader burnout isn’t about having a bad trading day, but is, as Paula Davis-Laack defines in Psychology Today, “the chronic state of being out of sync with one or more aspects of your life.”  The result of this misalignment is a lack of energy, enthusiasm, and confidence in your trading activities.

So to help you understand what might cause a lack of enthusiasm for entering the market, I’ve adapted a list of six sources of potential burnout.  The first three are presented here.

  • Lack of Control – Lack of control is sort of the epitome of trading.  The very act of trading suggests that we are, at some point, willing to “give up” control to let the market do what it will with our money.  That being said, there comes a point where increase stress over a trade and the lack of control can have a detrimental effect on more than just our decision process.  Prolonged periods of stress can lead to a higher risk of coronary disease, stroke, depression, and a host of other medical conditions.  Monitoring how you are coping with stress is primary to successful trading.
  • Conflict with Values – One of the biggest challenges traders face is reconciling core values with the decisions they are making.  This often reveals itself around money, since money often has a lot of emotional significance attached to it. The challenge is understanding which core value is conflicting with a particular decision.  We know that there’s a conflict when we feel uncomfortable while making a decision, or experience immediate regret once a decision has been made.  Ignoring these feeling over the long haul can create the same amount of stress as a Lack of Control.  Creating awareness and acknowledging these feeling can lead to valuable information about how,  and more importantly why, you’re trading.
  • Insufficient Reward – There’s a old adage that says, “Sometimes you eat the bear, and sometimes the bear eats you.”  Most traders have a pretty good understanding of what this means. There will be days when everything goes in your favor, and then there will be days we’d rather forget. Overall, though, there should be some reward for the effort we’re putting forth.  A novice’s reward might be valuable knowledge about the market and their engagement in it, while veteran’s reward might be financial.  Either way, the trader should walk away with something of value.  When that is no longer the case, it’s time to reevaluate the motivations regarding your reasons for trading.

Stay tuned for the next three sources of trader burnout.

Written by etradingcoach

February 7, 2014 at 10:09 am

The Good Enough Trader*

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In our discussion so far of the seven different filters, we touched on the Defeated Trader Syndrome and the Revenge Trader. Both of these filters have been very catabolic, or have negative energy, associated with them. Remember, the 7 different levels are neither positive nor negative but they have a negative or positive quality to them. With our next level, the Good Enough Trader, we are starting to enter the more anabolic or positive quality.

The Good Enough Trader

The Good Enough Trader has the ability to rationalize everything. Think of this level like walking around with a pebble in your shoe. Instead of taking the pebble out, you change the way you walk so that you don’t notice it. Ignoring the pebble isn’t the same as dealing with it. As a trader, because of the nature of trading, we often rationalize our trading to “that’s the way the market works.” It becomes “good enough” because the market is unpredictable and $#!+ is bound to happen. But just because the market is capricious, doesn’t mean we have to be with our trading decisions. Here are some thoughts about the nature of this filter.

Characteristics

Some of the thoughts of this level:

  • Being very tolerant.
  • Willing to compromise.
  • Settling or “good enough” on what results you’re getting.

Some actions that result in this level:

  • Worry – making sure that things work out.
  • Judgment – is this really the best situation to be in?
  • Analytical – trying to think your way out of a situation.

The Good Enough Trader is very contemplative, spending a lot of time in their heads.  Because of this contemplative nature and the fact that this level is about rationalization, it’s very easy to stay in that loop of always saying that whatever your results, it’s good enough. This is where a lot of traders find themselves maintaining a breakeven type of trading result. They don’t have big losers, like when they were learning to trade, but the winners aren’t really that big either. There’s a certain amount of maintaining the status quo. Nothing too big either from a winner or loser point of view.

In the next posting, the Good Enough Trader Fired Up, we’ll talk about some of the things you can do to inject some passion in your trading and boost your trading profits. If you would like an opportunity to talk about igniting some fire in your trading, sign up for a complementary exploration coaching call. Click this link to find an available time to meet. Please include a brief description of your particular challenge in trading.

*The educational material contained is gratefully adapted from the training received at the Institute for Professional Excellence in Coaching (iPEC), its founder Bruce D Schneider, and his bestselling book Energy Leadership.

Written by etradingcoach

January 28, 2014 at 7:45 am

What Are The Requirements for Elite Trader Performance?

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In one of blogs that I follow, a discussion has arisen asking the question if trading can be taught or is it reserved for a small group of special individuals that possess some innate ability.  My feelings, not surprisingly, fall into the camp that trading is a teachable skill that anyone with the desire can master.

And that desire is really what separates the “successful” traders from the wannabes.  As with any laudable skill, playing a musical instrument, performing the perfect layup, executing the perfect golf swing, the talent to perform a skill are only second to the hard work needed to perfect that skill.  Talent can take you so far but what separates the truly elite are the hours spent learning their particular craft.

The only exception to the trading world is that unlike the arts or athletics, where the environment doesn’t change, the environment of a trader is constantly changing.  For example, I learned to play the saxophone when I was in high school and the notes of the instrument are still in the same place to this day.  How I use those notes, or what might inspire me to play one note over another will vary, but the mechanics of what I’m doing haven’t changed and I count on that consistency to be able to play.

I can’t make the same claim about trading.  The market environment that I learned to become a trader in 2002 is  very different today.  And the environment is constantly changing depending upon people’s perceptions.  The “tools” that we use as traders; indicators, oscillators and the like, are just feeding us back information that has already happen.  The “constant” to a trader’s success is within the trader themselves. Its our ability to adapt ourselves to the market environment.  How we are going to use those tools becomes more important than what tool we’re using.

And that’s why it’s even more important to be willing to spend the extra time to practice how we, as traders, are going to react in certain situations.  Giving yourself the permission to find your “sweet spot” comes with many hours of, what Christine Carter, PhD from UC Berkeley’s Greater Good Science Center calls “grit.”  In her article for Psychology Today entitled A New Theory of Elite Performance, she talks about how deliberate and persistence practice over time is a greater measure of someone’s success than any innate ability.

Written by etradingcoach

January 15, 2014 at 11:32 am

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